Empire State Manufacturing Survey: Steady Amid Moderating Prices, Small Employment Gains

Highlights

• Manufacturing activity in New York remained steady in July.
• Mixed results seen in indicators such as new orders and shipments.
• Optimism remains subdued for future business conditions.

Activity Holds Steady in New York Manufacturing

Manufacturing activity in New York State remained steady in July, as reported by firms participating in the Empire State Manufacturing Survey. The general business conditions index, reflecting overall sentiment, declined by six points to 1.1. Although some respondents noted improvements, others reported worsening conditions. On the bright side, new orders showed a slight increase, while shipments continued to expand, albeit at a slower pace compared to the previous month. The survey also indicated shorter delivery times and ongoing declines in inventories. Employment levels saw a modest rise, although the average workweek experienced minimal change. Notably, the rate of input and selling price increases continued to moderate. Unfortunately, planned increases in capital spending remained weak. Looking ahead, firms expressed expectations for improved conditions, yet optimism remained subdued.

Manufacturing Indicators Reflect Mixed Results

According to the July survey, manufacturing activity in New York State showed little change. The general business conditions index declined by six points to 1.1. While 29% of respondents reported improved conditions, 27% reported worsened conditions. New orders displayed a marginal increase, with the new orders index remaining nearly unchanged at 3.3. Shipments, although expanding, grew at a slower pace, as the shipments index dropped by nine points to 13.4. Unfilled orders remained in negative territory for the third consecutive month, indicating a decline, while inventories continued to decrease with a negative index of -10.8. Furthermore, the delivery times index suggested shorter delivery times, coming in at -6.9.

Price Increases Moderate, Employment Sees Small Gains

The survey revealed a positive shift in the number of employees, reaching positive territory for the first time since January. With an index of 4.7, it pointed to a slight increase in employment. Meanwhile, the average workweek index showed little change at 0.3, indicating stability in working hours. Price increases exhibited ongoing moderation, as the prices paid index fell five points to 16.7, and the prices received index fell five points to 3.9. Over the past year, the prices paid index has dropped by nearly fifty points, while the prices received index has fallen a cumulative twenty-seven points.

Optimism Remains Subdued for the Future

Looking ahead, the index for future business conditions decreased to 14.3, reflecting muted optimism despite expectations for improvement. Modest increases are projected for new orders and shipments, while delivery times are anticipated to continue shortening. Employment is also expected to expand modestly. However, the capital spending index fell five points to 2.9, indicating persistently weak capital spending plans.

In summary, manufacturing activity in New York State held steady in July, with mixed results across various indicators. While some areas showed slight improvements, overall optimism remained restrained. The survey suggested ongoing moderation in price increases, small gains in employment, and cautious expectations for the future, particularly in terms of capital spending.